The Fed Waiting Game Has the Dow Down This Morning

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

On days when the Federal Reserve announces major decisions, stock market participants often sit on their hands and wait to see what news comes in the afternoon. That largely seems to be the case today, as the Dow Jones Industrials are down 39 points as of 10:50 a.m. EDT, reflecting the overall market's lack of enthusiasm. After a substantial rally over the past week and a half, short-term traders will be interested to see whether their predictions about the fate of Fed bond-buying prove correct. For long-term investors, though, the reality is that companies will eventually have to learn to live with a more normal interest-rate environment, and whether that adjustment begins now or in the future won't make a huge difference to the long-term value of their stocks. In that light, investors should be hoping for the Fed to disappoint the market so they can buy the stocks they want at bargain prices.

Among stocks leading the Dow lower is Procter & Gamble , which is down 1.5%. The company was downgraded by analyst firm Barclays, which argued that P&G hasn't demonstrated an ability to produce the growth rates shareholders have enjoyed in the past. Some have argued that the entire consumer-goods sector has been overvalued lately, given investors' appetite for defensively oriented stocks in a soaring stock market. Yet Barclays' assessment was quite company-specific, as it rewarded rival Colgate-Palmolive with an upgrade. Colgate's recent success in boosting its market share against key competitors in important international markets has helped make the company a standout, threatening P&G's dominance.

Verizon has fallen 1% as investors continue to assess the impact of the company's huge borrowing spree last week. With the company taking out $49 billion in bonds as part of its buyout deal to take full control of Verizon Wireless, Verizon will see a huge rise in interest expenses. The timing of the deal might prove perfect if the Fed's move today sends rates soaring further, as most of Verizon's new debt is long-term and allowed the company to lock in rates for years or even decades to come.

Finally, outside the Dow, shipping giant FedEx has jumped more than 3% after issuing a favorable earnings report. Improvements in operating profits and margins showed the company's ability to make price increases stick, and FedEx reiterated its earnings guidance for the full year. More importantly, though, FedEx's results stand as a measure of overall levels of economic activity, and its encouraging performance sheds a positive light on global economic growth potential in the near future.

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